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NRA: NLRB’s ruling upends 'joint-employer standard'

Aug. 27, 2015

The National Restaurant Association today issued the following statement regarding the National Labor Relations Board’s (NLRB) ruling in the Browning-Ferris Industries case. The 3-2 party-line decision — in which the Board ruled that a staffing agency can be considered a joint employer — has broad implications across several industries, including restaurants, according to an NRA press release.

"While we continue to review the NLRB’s ruling, it appears that once again the Board is stacking the deck against small businesses," NRA Senior Vice President of Labor and Workforce Policy and Regulatory Counsel Angelo Amador said in the release.

"The Board is overturning years of established law that has worked to help grow business and feed our economy," Amador continued. "The NLRB is already using its new rationale to dismantle the franchisor-franchisee model, which would stifle entrepreneurship and obstruct small businesses’ ability to continue to create jobs in an increasingly challenging economic and regulatory environment.

"Our industry is the nation’s second-largest private sector employer, and 90 percent of restaurants are owned by small business men and women. Our industry relies on the vision, innovation and risk-taking of our franchisees to provide opportunities to millions of people. The decision to upend the joint-employer standard will have dire consequences on franchisees' decisions to grow and expand their businesses, jeopardizing economic growth in communities across the country."

According to theNew York Times, the NLRB’s decision "made it substantially easier for unions to bargain for higher wages and benefits, potentially opening the door for organized workers at fast-food chains and other franchises to negotiate with corporations like McDonald’s and Yum Brands, rather than with individual restaurants, where they might have a harder time achieving their goals.”

A union representing those workers would now be legally entitled to bargain with the upstream company, not just the contractor, under federal labor law, according to the Times article

Also according to the Times, the NLRB held that Browning-Ferris Industries of California was a joint employer of workers hired by a contractor to help staff the company’s recycling center. The ruling could apply well beyond companies that rely on contractors and staffing agencies, extending to companies with large numbers of franchisees, the Timesstated.

"The decision today could be one of the more significant by the N.L.R.B. in the last 35 years," Marshall Babson, a lawyer who helped write the brief for the U.S. Chamber of Commerce in the case and who was a Democratic appointee to the labor board in Ronald Reagan’s presidency, told the Times. "Depending on how the board applies its new ‘indirect test,’ it will likely ensnare an ever-widening circle of employers and bargaining relationships."